Mortgage Refinancing Plans On An Underwater Home–Are There Beneficial Options Available For Troubled Homeowners?

There have been some positive reports related to homeowner refinancing as of late and some feel that potential changes that may be on the horizon which could make refinancing more costly for homeowners might be the cause of this refinancing activity, but there are also homeowners who are simply taking advantage of current low rates on home loans. However, homeowners who are underwater on their mortgage may need to address this issue in a manner that is not available through traditional refinancing options, which have left some homeowners wondering what opportunities do they have to refinance their underwater home loan.

Homeowners who are facing negative equity situations are among those who have been unable to refinance or may have also seen affordability issues arise as a result of economic factors like unemployment or the type of mortgage they may have associated with their home. Some homeowners have struggled financially as a result of their mortgage value decreasing but obviously there are also problems related to unemployment and cutbacks in wages which have weighed heavily on not only the housing market but the economy as well.

However, some homeowners have pursued refinancing as a way to take advantage of low rates that are currently available but this can be costly if a homeowner attempts a traditional refinancing option, which has been the case for some who are in a decent financial position and not facing mortgage payment difficulties. As an example, some homeowners who are not severely underwater on their mortgage may be able to use a cash-in refinance option as a way to not only apply money towards their mortgage principal at the time of refinancing but also make up for some of the lost equity they have seen, gain a more affordable payment and rate on their home loan, and potentially save money over the long run if they qualify for a rate reduction that is sufficient enough to make up these losses.

There have also been some officials who are prompting homeowners to refinance with the FHA if they are facing negative equity issues, but these home loans may be more costly due to mortgage insurance premiums on these loans, and there are some homeowners who may not qualify for this particular type of refinancing opportunity. However, homeowners do need to remember that options like the Home Affordable Refinance Program are in place and may be able to help those who are underwater avoid further financial distress.

HARP is one of the extension programs offered from the Making Home Affordable Program, for homeowners who are unaware, and it may help men and women qualify for more affordable home loan payments when negative equity is an issue. Yet, homeowners may also want to look at programs available directly from their servicer, that may help them through reducing their mortgage principal, or from state-specific programs to address negative equity issues as well. Some areas of the nation have seen decreases that are much greater than others and, as a result, may have gotten funding to establish a homeowner assistance programs when negative equity is a problem.

Homeowners can consult with counselors or representatives from their mortgage servicer to see what options may be available from their bank or for their particular situation, but since there are some predictions that home prices may decrease further in 2011, homeowners who are experiencing financial problems as a result of negative equity have often been advised not to wait when it comes to consulting these resources to see what plans may be helpful for their situation.